2020 will be a year of change in employment law for businesses in the construction sector – not withstanding any further changes following Brexit. Here is what employers need to know.
New legal rights for workers
Many organisations in the sector engage temporary staff on zero hours or casual contracts to provide them with flexibility. Currently, you only have to provide employees (rather than the wider group of workers) with contractual information about their employment and have two months to do this from their start date.
However, from Monday 6th April 2020 you must give all workers you engage from that date a written statement which sets out certain prescribed information about the work they are employed to do for you and benefits they will receive. You must give the worker or employee the statement on their first day of work (or earlier). There are no exceptions so, even if you only expect them to work for you for a short time, you still have to give them a statement.
The statement has to provide a lot of information – and most of this has to be provided on day one. For example, it must identify the name and address of the employer, the worker’s start date, rate of pay, how this is calculated and how often it is paid. It must also set out their days and hours of work (including if this varies) and where they are expected to work. Plus, it should include details of their right to paid leave including holiday or sick leave (and how this is calculated) and any other benefits they are entitled to, details of any probationary period or trial shifts and any training you will provide or expect them to undertake. Some of this information has to be included in the same document which means you can’t refer workers to a separate policy or handbook.
If you already use, what are often referred to as ‘section 1 notices’ to employ staff, you’ll be used to providing some of this information. However, some of the requirements are new – such as details of working hours/days and training and you will need to have new standard precedents in place for both workers and employees and make sure that your systems are adjusted to make sure you don’t miss the deadlines.
You also will need to correctly determine the employment status of your staff and make sure that only those who are employees receive a contract of employment rather than a simple statement or letter of engagement setting out the statutory information.
If you don’t provide a written statement which sets out all of the required information, workers and employees can receive up to four weeks’ pay (which is capped) in compensation from an Employment Tribunal.
Rights of existing employees to receive updated contracts
You don’t have to make any immediate changes to the contracts of your existing staff unless, an employee asks for an updated statement (in which case you have one month to respond) or you decide to make changes to their existing terms and conditions.
However, it might be more straightforward to give all existing employees a written statement that complies with the new requirements in advance of 6 April. That way you’ll be in control of the process and won’t have to worry about responding to individual requests within the set time limits. This may mean that you’ll need to conduct an audit to obtain the information you need, such as the days each member of staff works, if these vary and how any variation is agreed. If you have a large workforce, that may take some time.
Changes to holiday pay
Currently, if your workers’ pay varies because they don’t have normal working hours, or their days of work vary, you have to work out their holiday pay by going back 12 weeks to work out their average weekly rate of pay. This has to include regularly worked overtime, allowances that are linked to work (rather than to cover expenses) and some commission schemes.
From 6th April 2020, the calculation period is being extended to 52 weeks. This change is designed to even out the seasonal variation in pay for many casual workers. If your worker hasn’t worked for you for 52 weeks, you will have to include as many whole weeks of pay information as you have available.
You must make sure your payroll team know about this change and have the software to support it.
If you use temporary agency staff, you might notice that the rates increase after 6th April 2020. From this date, employment businesses won’t be able to employ individuals on ‘Swedish derogation’ contracts of employment. This means that agency staff may be entitled to equal pay with employees you directly employ after 12 weeks in the same role.
Off payroll workers
If your organisation engages ‘off-payroll’ workers it will become responsible for determining their employment status and paying NICs for those that are deemed to be employees. These changes may result in your organisation paying higher fees or (most likely) negotiating lower fees with the contractor.
The off-work payroll working rules, commonly known as IR35 have been around since 2000. They were introduced to ensure that individuals who work like employees pay broadly the same employment taxes as employees, regardless of the structure they work through. The rules apply to anyone who provides their services to another person or organisation through an intermediary, such as a personal service company (PSC).
About the authors: Sybille Steiner is an employment partner and Jo Moseley is a professional support lawyer at law firm Irwin Mitchell LLP